Mr. Joe Coyne

Executive Director, Converse Area New Development Organization

Executive DirectorConverse Area New Development Organization, Inc. (“CANDO”)130 South Third StreetDouglas, WY 82633(307) 358-2000jcoyne@candowyoming.com

Before the

United States Senate Committee OnEnergy & Natural Resources

Casper, WyomingApril 12, 2006

Mr. Chairman, welcome to Wyoming! I thank you and the committee members for your time this afternoon.

I work for the Converse Area New Development Organization, a local economic development agency known by the acronym “CANDO”. We work hard with our Congressional staff, state legislature, Governor, local elected officials and other organizations to help grow our local economy.

I understand that today you are receive testimony regarding the legislative, economic, and environmental issues associated with the growth and development of the Wyoming coal industry. I would like to address those issues from my perspective as a local economic developer in Douglas and Converse County, Wyoming.

First, we should take a moment to make some general observations about the rural nature of Wyoming. Some have called Wyoming a small city with very long streets. Our total population is less than 500,000 residents. Douglas has grown to 5,200 citizens, and Converse County is only about 12,000 people. By contrast, the population of Albuquerque, your hometown, Mr. Chairman, is about 800,000. However, even Albuquerque is small compared to the size of the metropolitan areas back East or out on the Pacific Coast. Wyoming’s rural – even frontier - nature has cultivated a strong independence in her residents. Traditionally, the State has taken pride in its ability to survive.

The wind here can be astonishing. When similarly strong winds blow back East, folks get all excited, give the wind a formal Name and call it a Tropical Storm! Yet here, we just brace ourselves and get on with our day.

Our “long streets” and open spaces intimidate many. I drove 50 miles to be here this afternoon – a distance that might take you across three state lines as you drive around Washington, DC – but I only spent a fraction of the time (about 45 minutes) you would spend driving the same distance. In Wyoming, we relish our “windshield time,” taking in the open space, wildlife and scenery every day.

Wyoming is, by far, the nation’s largest coal producer, shipping 400 million tons of low sulphur coal annually to 35 states to generate electricity. Wyoming’s coal industry has established an incredible record of safety with its mining operations, and has repeatedly proven itself to be a good steward of our environment.

My point is this: As you examine the issues surrounding Wyoming’s energy growth, you simply cannot do so with the same perspective as you might in other areas of the United States.

Yet, I have also witnessed a shift in the traditional thinking of Wyoming. Folks want more than survival. We want to move away from the historic third world economy of mineral extraction. Moreover, we want to keep more of our youth in Wyoming. To do that, we must diversify our economy. One opportunity that is before us today is to add value to our coal by gasifying it, and then export electricity and ultra clean diesel fuel instead of trainload after trainload of raw coal. The coal gasification industry could significantly enhance Wyoming’s and the nation’s economy, while greatly strengthening our national security by minimizing the amount of petroleum we import to meet our country’s transportation needs.

There are significant risks to development of a coal gasification facility or a coal-to-liquids plant. The cost alone is staggering, easily in excess of $1 billion dollars. While there is a great opportunity for making serious money while oil is selling for $65-70 per barrel, who can guarantee that the price will stay that high for 20 years? And who is willing to prove up the Fischer-Tropsch process with Wyoming coal, at Wyoming altitude? Moreover, who is willing to build the electrical transmission lines that would be necessary for carrying any additional power generated in Wyoming?

We in Wyoming are very thankful for the efforts of Senator Craig Thomas and his colleagues, who have addressed some of these concerns in the Energy Bill of 2005. Likewise, the Wyoming Infrastructure Authority is working hard to stimulate development of much needed transmission lines, while the Wyoming Pipeline Authority pushes for the development of more oil and gas pipeline capacity.

It may be that the Wyoming coal gasification industry gets started not by generating electricity, nor by producing ultra clean diesel fuel, but instead can simply produce synthetic gas. Existing gas pipelines can easily move synthetic gas to market right now, thereby minimizing the fiscal risk of coal gasification. However, that limited use of coal does not come close to the full potential of Wyoming coal. It does not significantly diversify Wyoming’s economy. And it would not go very far to reduce foreign oil imports. Eventually, we must do those things.

Political and business decisions to be made in the immediate future will address the inherent financial risks of coal gasification. I thank you for taking the lead on addressing some of those issues in the Energy Bill of 2005. Much more work remains to be done.

Currently, Wyoming is preparing a bid for the U.S. Department of Energy regarding FutureGen. If the government’s goal is to place this federal facility in the one place that it can truly change our future, it needs to be built in Wyoming. Other states may be able to gasify coal, but I urge you to think larger. The gasification of coal allows you to capture virtually all of the carbon dioxide from coal – preventing its release to the atmosphere – and then to make beneficial use of that gas. In Wyoming, carbon dioxide is already being re-injected into the ground, revitalizing our vast oil and gas fields. Further, the Fischer-Tropsch process that can be combined with coal gasification creates a fantastically ultra clean diesel fuel. While there is a national market for that fuel, Wyoming can offer the federal government a much more compelling “test” for coal gasification.

Our efforts at CANDO have led us to conclude that coal gasification can best succeed if it is also matched up with wind and bio-fuel production. For instance, the Fischer-Tropsch process creates a high-energy byproduct called naphtha. Refineries commonly use naphtha to increase the octane of gasoline and other products. But is also makes an excellent companion to wind energy. As you know, even in Wyoming, sometimes the wind does not blow. In fact, the intermittent power supply of wind is often seen as a significant drawback to its development. However, if wind energy were partnered with coal gasification, the excess naphtha could be burned (and it burns quite cleanly) in generators to provide a relatively constant source of electrical power. Likewise, there are synergistic opportunities for bio-fuels, fertilizers, and other industries wherever this process is followed.

If our nation is to truly become more energy independent, we will need to look at every resource available. Wyoming’s vast fossil fuel resources can be perfectly balanced with alternative energy production, particularly wind. Too often, we have looked only to export raw materials, such as coal, oil, gas and uranium. We must not ignore the opportunities that are before us just because they may seem complicated, complex or expensive. We can do this thing if we are patient, wise, and visionary.

Wyoming has unique attributes that would allow a project like FutureGen to succeed beyond your imagination. Please do what you can to appropriately encourage the decision-makers to put FutureGen in Wyoming. In Wyoming, you will find support at the grassroots and leadership level. You will also find all the building blocks to effectively and economically prove that coal gasification is a viable energy alternative to imports.

Overall, there is one major deterrent to development of any kind of coal plants in Wyoming: The Inadequacy of electrical transmission lines. Without transmission, Wyoming cannot build another significant power plant of any sort. The experts in this area are the folks at the Wyoming Infrastructure Authority, and I urge you to listen carefully to their comments.

Finally, I ask you to consider another time in history, when the Congress created, essentially, a “bounty” to be paid to any company that could create an energy efficient appliances. You created an industrial race to develop energy efficiency, environmentally friendly refrigerators. As a result, consumers quickly got the appliances they needed. An adequate incentive was offered to industry, who immediately responded, and the entire appliance market was positively impacted. I would suggest that a similar bounty might whet the appropriate appetites to motive industry to build the first commercially viable, full scale, coal gasification plant.

Thank you for studying this issue. Working together, I know that Wyoming can help meet America’s growing energy appetite, and at the same time strengthen our country’s independence.

It has been a privilege to speak today and, if time permits, I will try to answer any questions.

*Joe Coyne is the Executive Director of the Converse Area New Development Organization, Inc., (“CANDO”), which is the local economic development agency for the City of Douglas and Converse County, Wyoming. Prior to joining CANDO in January 2000, Joe served as the Research Director at the Wyoming Business Council; managed the State of Wyoming’s Tourism Information Center program; and participated as legal counsel in numerous residential and commercial real estate development projects.

Joe is currently the President of the Wyoming Economic Development Association (“WEDA”). He holds a BA from Beloit College (Wisconsin) and a JD from the University of Michigan Law School. Joe and his wife Patty live in Douglas, Wyoming with their six children.